One day, precious metals are gaining; the next day, they’re falling, and the rise and fall of the dollar is blamed.
Yesterday, the dollar rebounded after record lows against the Euro, and precious metals prices finally took a hit. “Silver for May delivery dropped 18.5 cents to $18.015 an ounce on the Nymex, while May copper lost 7.7 cents to $3.9230 a pound,” the AP shared, while similarly, “Gold for June delivery fell $5.60 to $931.90 an ounce on the New York Mercantile Exchange, after earlier falling as low as $925 an ounce. Gold has gained 7 percent this year but has struggled to return to levels approaching its all-time high of $1,038.60 an ounce, reached March 17.”
While the fluctuating dollar plays a weighty role–when the dollar is down, gold is hailed as the safe haven; when the dollar’s doing well, it’s time to cash in–there are other factors at play. For example, gold futures in India hit a tough lull on Wednesday, decreasing as a result of low domestic demand and evident weakness in base metals. Low domestic demand is also partially due to the higher prices that we have seen, so if prices continue to falter, so could supply and demand.
For all of the country’s action in dictating gold prices, it’s interesting to note that India still doesn’t have a price mechanism in place for gold – or, it appears, for many other commodities. Other countries rule the price index, it seems. “London prices make the benchmark price of non-ferrous metals and gold, while many other countries decide other commodity prices.” Then again, it’s important to realize that London accounts for 90 percent of world trade in metals. In fact, India could become the most important partner of the British capital, according to this article.
But what does all of this say about precious metals? Where is gold headed in the future? Check out our carefully researched price predictions for some ideas, and feel free to share your own thoughts on MetalMiner. We would love to hear from you!